(Adds details on Hon Hai securing Apple order.)

By Wei Yi Lim

Of DOW JONES NEWSWIRES

TAIPEI -(Dow Jones)- Taiwan's Hon Hai Precision Industry Co. (2317.TW) has secured an exclusive contract to assemble a more advanced version of Apple Inc.'s (AAPL) popular iPhone, a person familiar with the situation told Dow Jones Newswires Friday.

The person, who declined to be named, said Hon Hai would be producing next- generation iPhones for Apple and is the exclusive contract manufacturer for the new phones.

A Hon Hai official, who declined to be named, told Dow Jones Newswires that the company was in talks with Apple for the supply of a "more advanced version" of the current iPhone. The Hon Hai official declined to provide further details.

Apple spokeswoman Jill Tan declined to comment.

Apple, like many other big personal-computer and consumer-electronics brands, doesn't actually make most of its products. It hires manufacturing specialists - mainly companies from Taiwan that have extensive operations in China - to assemble its gadgets based on Apple's designs. They use parts from other outside suppliers, many of which also are from Taiwan and elsewhere in Asia.

The arrangement frees Apple and its fellow vendors from running complicated, labor-intensive production lines, while the ability of Taiwanese companies to slash manufacturing costs helps cut product prices over time.

Apple is using a similar setup for the iPhone, the multimedia cellphone the company unveiled in June last year with great fanfare.

Some analysts speculate that the new iPhones could be in the market as early as May.

Apple has said previously it aims to sell 10 million iPhones by 2008.

Apple almost never discusses its relationships with these contractors, and the companies generally are reluctant to discuss their clients.

Hon Hai is Taiwan's largest contract manufacturer of electronic products.

-By Wei Yi Lim, Dow Jones Newswires; 88622 502-2557; weiyi.lim@dowjones.com

  (END) Dow Jones Newswires
  03-28-08 0536ET
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